The majority of coal consumers in India will from now on have to bear higher freight costs as the Railway Ministry has recently implemented a differential hike in coal freight rates.
According to the freight revision, transportation of coal for distances in between 200-700 km from the mines will be costlier by 8-14%; however, freight rates upto 200 km were kept unchanged.
In contrast, the freight rates for distances beyond 700 km have been lowered by 4-13%.
The upward freight revision is going to impact around 60% of the coal-based power plants in the country that are situated within 200-700 km distance from mines. These plants are likely to raise their power tariffs by at least 6-7 paisa per unit in order to offset the impact of the freight hike.
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